A technical analyst would consider the following a strong buy signal:
A) A graph of declining prices ends in a trough followed by an upward trend that breaks through the declining trend channel.
B) A graph of increasing prices ends in a peak followed by a downward trend that breaks through the rising trend channel.
C) A graph begins to trade in a flat trend after it breaks out of its rising trend channel
D) A graph begins to trade in a declining trend after it breaks out of its flat trend channel
E) None of the above

Question

Quizplus · Accepted Answer

A graph of declining prices that ends in a trough followed by an upward trend that breaks through the declining trend channel is considered a bullish reversal pattern by technical analysts. This is because it indicates that buyers have regained control and are pushing the price up, breaking through the previous resistance levels. This is a strong buy signal for traders who follow technical analysis.

A Technical Analyst Would Consider the Following a Strong Buy